All posts tagged The Great Bond Selloff

The trickle of retail cash moving out of bond funds shows signs of becoming a flood.

Last week, Gongloff tossed up a post reporting that for the first time in two years, mutual fund investors started shedding corporate bonds and Treasurys as they pulled $1.66 billion out of bond funds in the week ending Dec. 8. That was mainly a $1.26 billion outflow from muni funds. But taxable bond funds lost $401 million that week too.

By far, the most stunning news coming out of weekly fund flow data was the massive outflows from fixed income portfolios. In aggregate, retail investors withdrew a net $8.6 billion from bond funds during the week ended 12/15/10, well above the $1.7 billion of outflows in the prior week, and the highest level of attrition on record. Outflows from both muni and taxable bond funds surged last week coming at $4.9 billion and $3.8 billion, respectively. Most of the redemptions likely reflected falling NAVs, as long-term rates continued to trend higher, and credit spreads widened (particularly on the muni side). Assuming investors continue to reallocate away from fixed income, we expect some of those dollars to find their way into equity funds.

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A rout in raw materials has helped drive down holdings in a Carlye Group firm’s flagship fund from about $2 billion to less than $50 million. The collapsing commodities market is spreading pain well beyond specialists to some of the heaviest hitters on Wall Street.